--- title: "Sound would hand two small income ETFs to Hilton Capital Management" url: "https://etf.net/news/sound-proposes-moving-etfs-to-hilton-2026-10-16" published_at: "2026-10-16T12:07:58.700Z" updated_at: "2026-10-16T12:07:58.700Z" byline: "ETF.net Research" --- # Sound would hand two small income ETFs to Hilton Capital Management Sound says the funds have not been profitable for it, fees and tickers would stay, and holders still have to vote. By ETF.net Research. Published Oct 16, 2026. Sound Income Strategies would hand two small income funds to Hilton Capital Management, funds that Sound says have not been profitable for it. Tidal Trust II proposed the move in an initial Form N-14, the registration statement for a fund combination, filed with the U.S. Securities and Exchange Commission on Oct. 15, 2026. The funds are the Sound Equity Dividend Income ETF DIVY and the Sound Enhanced Fixed Income ETF FXED, both Sound Income funds and both series of Tidal Trust I. They would move into the Hilton Dividend & Yield Equity ETF and the Hilton NCA Enhanced Fixed Income ETF, new series of Tidal Trust II. NCA is New Century Advisors. Tidal Trust I and Tidal Trust II are separate trusts that share an adviser, Tidal Investments, which would stay. The change is the sub-adviser, and which trust holds the funds. Hilton Capital Management would sub-advise both, and New Century Advisors would join it on FXED. Sound told the board of Tidal Trust I that it did not believe it had the wholesale distribution to get the funds to a viable size. As a consequence, Sound said, the funds had not grown to a viable size since they launched on Dec. 30, 2020, and had not been profitable to Sound. Under the unitary management fee, Sound pays substantially all of each fund's expenses. The filing says that lack of profit to Sound left each fund's long-term viability inside Tidal Trust I uncertain. The board unanimously recommends that shareholders approve. Sound also told the board it believes Hilton has the distribution network to get the funds to greater scale. As of Sept. 30, 2026, the two funds together held $64.3 million, $27.6 million in DIVY and $36.7 million in FXED. Hilton would pay the costs of the combinations, including the registration statement, printing and mailing, and legal fees. The filing leaves the estimated total blank. On Sept. 30, 2026, Hilton said it had acquired a strategic minority, non-controlling stake in New Century Advisors. The filing says Hilton believes the bond fund would benefit from that firm's fixed-income expertise. Hilton already sub-advises two other series of Tidal Trust II, the Hilton Small-MidCap Opportunity ETF SMCO and the Hilton BDC Corporate Bond ETF HBDC. ## Fees and tickers would stay Each fund would transfer its assets and liabilities to the new series. Shareholders would receive new shares equal in value to the shares they hold, and the old fund would then be terminated. The new funds would keep the same investment objectives and fundamental policies, and substantially similar strategies and risks. DIVY seeks current income from a dividend yield of at least twice that of the S&P 500, with long-term capital appreciation second. FXED seeks current income and the opportunity for capital appreciation, and would keep a policy of investing at least 80% of net assets in fixed-income securities. Those holdings typically include U.S. corporate bonds, preferred stock, bond ETFs, sovereign debt and privately placed debt, and also shares of business development companies and real estate investment trusts. The filing says the business development companies and real estate investment trusts typically pay higher yields than investment-grade bonds and preferred stocks. The filing's comparison table says both successors would keep their tickers, DIVY and FXED, and their listings on the New York Stock Exchange. The management fees would not change. For the fiscal year ended Nov. 30, 2025, DIVY had a 0.45% management fee and 0.45% in total annual operating expenses. The estimates for the new equity fund, assuming the combination had already happened, are the same. For the same year, FXED had a 0.49% management fee and **1.89%** in total annual operating expenses. The filing estimates the same figures for its successor. The table adds a 1.40% line for acquired fund fees and expenses. The filing defines those as the indirect costs of investing in other investment companies, and the bond fund's holdings include bond ETFs, which are other funds, along with business development companies and real estate investment trusts. That 1.40% sits inside the 1.89% total. The fee table lists that total as what a shareholder pays each year, as a percentage of the value of the investment. The management fee itself would stay 0.49%. The filing says each reorganization is intended to qualify as a tax-free reorganization. In general, a fund would not recognize gain or loss on the transfer, and shareholders would not recognize gain or loss on the shares they receive. Closing is also conditioned on a tax opinion. Hilton, on the equity fund, and New Century Advisors, on the bond fund, intend to buy and sell securities in the portfolios after they take over. The filing expects those trading costs to be minimal, and the funds would pay them. They are not part of the expenses Hilton is covering. ## The meeting date is still a placeholder Shareholders of each fund vote only on their own reorganization. The invitation sets a special meeting for Dec. 15, 2026, at 10 a.m. Central time at Tidal Trust I's offices in Milwaukee, Wisconsin. The date and the hour are still placeholders, and the shareholder record date is blank. The proposed closing is 9:30 a.m. Eastern time on Dec. 21, 2026, also a placeholder, or another date the parties agree. 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